November 13th, 2015

Out of all the words one could use to describe auto insurance, straightforward would not be one of them. As you’ve likely found out if you’ve had to compare auto insurance policies in the past, there are countless factors and details that make up a policy’s premium cost. So if you’ve recently gotten a new policy and gasped at your premium costs, or found out your friend pays half the amount you do, this article is for you.

Keep reading to learn why your auto insurance rate is so expensive and be more prepared the next time you compare auto insurance.

You Have a Poor Driving History

Nothing takes the wind out of possible premium savings’ sail like a poor driving history. Traffic tickets, accidents and DUIs all drastically affect what you’ll pay to be insured.

Insurance companies calculate everything based on probabilities, so the more claims you’ve had to make, the higher your premium will cost as a result. The tough thing is, even if an accident isn’t your fault, there’s a chance you could still be penalized for it. The lone silver lining here is that insurance companies only go back three years when looking at driving records (though they do keep a record of your entire history), a validation that poor drivers can be rehabilitated and given the fresh coverage life of their premium-saving peers.

You’ve Cancelled a Policy or Two in the Past

Not fulfilling a current term is a surefire way to spike your auto insurance rates for the future. The next company that looks to insure you will see your cancelled policy and think you’re a red flag.

You Have the Wrong Coverage

The type and age of the car you drive can mean very different things in terms of the coverage you need. For example, if you have a new car, you probably want comprehensive coverage to protect your investment in case it gets totaled. But if you have an old car that’s not worth much, it’s probably best to pay less on the premium and just go with liability coverage. Reevaluate your savings, how much you depend on your vehicle and what you’d do in the event it was totaled to get the amount of auto coverage you need.

You’re New with Your Insurer

When you get a new policy with an insurance company, you’re entering the highest tier of possible price points. As an incentive for your continued business, many insurers will offer discounts each additional year you spend with them. Be wary of any insurer who hikes up rates on policy renewals, especially without telling you so.

You’re Young

Turning 25 is a new era in the auto insurance world. Motor vehicle crashes are the leading cause of death for U.S. teens, according to the Center for Disease Control and Prevention. 16 to 19-year-olds are at the highest risk, being involved in fatal crashes nearly three times as much as those aged 20 and older. So even though crash statistics taper off well before 25, it’s still the cutoff line between paying sky-high adolescent rates and more reasonable adult prices. Insurers love statistics, so there’s not much you can do about this one, aside from maintain a great driving record and long for the driving wisdom age 25 allegedly brings.

Gender

Women are safer drivers than men statistically and this will subtly be reflected in your premium costs.

You’re Not Married

What do you get when you’re married and have zero traffic tickets, accidents or DUIs? The answer: a cheaper premium than the single person with the exact same driving record. Though it may be tempting to get hitched and watch the savings roll in, our team of advisors does not recommend it.

You Live in a City

The more people and congestion in the area you’ll be driving your car in, the higher your premium costs will be. Cities typically present more opportunities for theft, accidents and unpredictable scenarios than a vehicle being garage kept in the suburbs has to face.

Your Deductible is Too Low

Adjusting your deductible is probably the easiest way to save on your premium cost. If you’re unfamiliar, a deductible is the amount of money you pay out of pocket toward something before your insurance kicks in. The lower your deductible is, the less you’ll have to pay yourself, just know that your premium will be much higher as a result.

You Have a Poor Credit Score

Good credit is essential to many areas of life—owning a home, buying a car, securing an apartment or even landing a job. Insurance is no different. One of the first things a company will do before giving you a policy quote is go through your credit score and history. If you have bad credit, expect to pay a higher premium as you’ve been deemed a high-risk insuree.

Your Driving Tendencies

How and where you drive will also impact the type of policy you receive. If you’re commuting 100 miles to work or have multiple drivers on one policy, you’ll definitely pay a higher premium than someone who mainly drives down the street and is the sole entity on the insurance.

Your Vehicle Age/Make/Model

If you have a new minivan with excellent safety features, your insurance company will reward you with a lower premium cost. If you have a new sports car that can go 0-100 in 6 seconds, you’ll likely have to shoulder a higher premium. If you have an old beater with a lot of miles and zero safety features, it’s probably not even wise to insure it outside of personal liability coverage.

You’ve Had Auto Theft in the Past

It may be unfair, but if your car has been broken into in the past, you could be paying a higher premium because of it. Auto theft is extremely common though, and isn’t treated as harshly in premium costs unless you also live in an area that’s prone to crime.

Have you found other factors to affect premium costs when you research and compare auto insurance rates? Send us a tweet @CoverHound to share what you've found!